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A Year Like No Other

As we reflect on 2017, it is tempting to focus on events that probably had little impact on the markets or the global economy – because it really was a year like no other.

In the past 12 months, we faced new nuclear fears from North Korea; debated whether NFL players should take a knee during the national anthem; experienced the largest security breach in history; tempted fate by looking at the sun during the total solar eclipse; witnessed countless allegations of sexual misconduct in Hollywood, Congress and around the world; watched the meteoric rise of the cultural phenomenon called

#MeToo; mourned the deadliest mass shooting in modern US history; regrouped after one of the most devastating and costly hurricane seasons ever; watched hopelessly as California burned; learned to weave the term “fake news” into our every-day conversations; and were perplexed at this new thing called Bitcoin.

Now, let’s talk about how the markets around the globe performed – because it really was a year like no other.

At 30,000 Feet: It Was a Great Year

NASDAQ ended the year 28% higher – its best year since 2013;

The Dow Jones Industrial Average ended the year 25% higher – its best year since 2013;

The S&P 500 ended the year 19% higher – its best year since 2013;

At nearly nine years old, the bull market is now the second-oldest and second-strongest in

Sector Performance

Further dissecting the performance of the eleven S&P 500 sectors, we found that:

The top performer for the year was Technology, up 38.8%;

Materials jumped almost 24%; followed closely by Consumer Discretionary, which gained 23%; Financials up 22.2% and Healthcare up 1%;

Energy and Telecommunications were both down, losing 1% and 1.3%,

Emerging Markets Soar in 2017

While 2017 was a great year for U.S. stocks, international and emerging market investors did even better. Europe was up 27%; the Pacific region advanced 28.9%; and emerging markets surged 37.4%. Even Japan was better with a 24.3% gain. But wait, there’s more:

Argentina’s Merval Index surged 77% this year;

The Nigerian All-Share Index was up 42%;

Turkey’s benchmark Index rallied 48%; and

Hong Kong’s Hang Seng Index rose 36%.

Record Low Unemployment

The number of Americans filing for unemployment benefits point to a tightening labor market, certainly a helpful ingredient to the stock market’s 2017 performance. At the very end of the year, U.S. workers filed 245,000 initial claims for unemployment benefits and since mid-October, claims were confined to a range of 223,000 to 252,000.

That last week in December marked the 147th straight week that claims remained below that important 300,000 threshold, which is associated with a strong labor market. That is the longest such stretch since 1970 and important because at that level, economists consider the labor market to register “full employment.” The jobless rate is at a 17-year low of 4.1 percent.

Consumer Confidence & Spending

In September, U.S. consumer spending recorded its biggest increase in more than 8 years. The Commerce Department reported that consumer spending – which accounts for 2/3 of U.S. economic activity – jumped 1%. Further, consumer confidence reached a 17-year high in November, although it dipped slightly in December.

Tax Cuts and Jobs Act

Early in the morning of December 20, 2017, the Senate passed the “Tax Cuts and Jobs Act” by a party-line vote of 51 to 48; (Republican Senator McCain was absent for medical reasons). Irrespective of your political leaning, this legislative achievement was the most sweeping overhaul of the U.S. tax system in more than 30 years.

By almost all accounts, the Tax Cuts and Jobs Act is predicted to raise the federal deficit by billions of dollars and perhaps as much as $2 trillion over the next 10 years. The big question is how much economic growth the new bill will create, thereby offsetting the increase to the federal deficit.

Here is a very quick summary of other provisions of the tax bill:

The bill creates a single corporate tax rate of 21%, beginning in 2018, and repeals the corporate alternative minimum tax.

The bill retains the current structure of seven individual income tax brackets, but in most cases, it would lower the rates

The bill raises the standard deduction to $24,000 for married couples filing in 2018 (from $13,000 under current law), to $12,000 for single filers (from $6,500), and to $18,000 for heads of household (from $9,550).

The bill ends the individual mandate, a provision of “Obamacare” that provides tax penalties for individuals who do not obtain health insurance coverage, in 2019. While the mandate will technically remain in place, the penalty would fall to $0.

The bill temporarily raises the child tax credit to $2,000, with the first $1,400 refundable, and create a non-refundable $500 credit for non-child dependents.

The bill caps the deduction for state and local taxes at $10,000 through 2025

What’s in Store for 2018?

Now, let’s tackle the question on everyone’s mind: will 2018 continue to reward investors with big stock market gains? Or will we slide backwards? Well, that depends entirely on who you ask.

So, I’ll leave you with this: according to Bloomberg, a year ago when asked to predict what 2017 might look like, not a single strategist at the top 18 banks saw the markets rising as much as they did. In fact, among those 18 strategists, the average gain predicted was 5.5% and the biggest bull thought the market would gain 12%.

So, I’ll suggest that we all reflect favorably on the markets performance during 2017 and make sure we’re fully prepared for the coming year.

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In response to demands from baby boomers, aging-in- place improvements that help seniors stay safely in their homes are more stylish and functional than before. Think of a curved and tiled shower soap dish that also serves as a grab bar. Or a decorative kitchen cabinet pull with a wider loop for arthritic hands.

More forward-looking homeowners are including aging- in-place features in home renovations such as a kitchen makeover, so they won’t face last-minute decisions during a health crisis. And improvements such as curb-less showers and LED nightlights in soothing colors in a bathroom can benefit everyone from grandchildren to their grandparents. Such changes can also add to a home’s resale value, says Mary Jo Peterson, a Brookfield, Conn., kitchen and bath designer and aging-in-place specialist.

We’ve pinpointed five areas where improvements could help you stay in your home longer. Estimated costs include labor and installation, and they are based on average prices [prior to Hurricane Harvey] in Houston, Tex., says aging-in-place specialist Dan Bawden, who is also president of Legal Eagle Contractors in Houston.

Live in a Multilevel Home?

Install a Pneumatic Vacuum Elevator

Cost: $60,000 to $80,000 (big project)

If you live in a multilevel house and you plan to stay there as long as you can, you’re going to eventually face the problem of how to get up and down the stairs.

Some homeowners turn to a traditional elevator, but installing one is a major project that can be both expensive and time consuming.

A newer alternative: the pneumatic vacuum elevator. It looks like something from “The Jetsons,” and it operates on the same general idea behind the tubes at your bank drive-through but with a fold-down seat for you. The tube whisks you up to the next level, powered by a vacuum pump. It’s cheaper and takes less time to install than a traditional elevator. Another bonus: It takes up less room in your house.

Too Many Stairs to Climb? Add a Stair Lift

Cost: $4,000 to $6,000 (small project)

For a less-expensive option, give old-fashioned stair lifts a look. The seats and footrests on newer models fold up when not in use, and the rails have a sleeker and more modern appearance.

They’re particularly easy to use on a flight of stairs with no curves. Installation usually takes less than a day.

Boost Bathroom Safety with a Curbless Shower

Cost: $8,000 to $11,000 (big project)

A curbless shower allows you to walk in and out without stepping over a big threshold. It opens the floor space for easy maneuvering, which can be an advantage when you might need help from someone else while you’re in the bathroom.

You can also use a rolling shower chair, so you can get in and out without needing to stand, walk or transfer in a wet area that can be slippery, says aging- in-place consultant Louis Tenenbaum. The floor is sloped so the water flows down the drain. You can add a chair or bench, with shower accessories reachable from a sitting position.

Add Grab Bars to Your Bathroom

Cost: $1,000 (small project)

Your bathroom needs to be safe, but it doesn’t need to look like a hospital room. Some of the newer grab bars blend better into the bathroom’s design and avoid that institutional look. The bars hold your weight but have the same decorative details as towel racks or shower shelves.

If you need support pulling yourself up from the toilet, for example, you can grab on to a reinforced toilet roll holder. It also helps to place them strategically where you will actually use them, so think about how you move around the bathroom before installation.

Revamp Your Kitchen Cabinets with Pull-Down and Pullout Shelves

For aging homeowners, reaching wall cabinets can be a stretch. But there’s a solution: pull-down and pullout shelves, says Curt Kiriu, president of CK Independent Living Builders, in Mililani, Hawaii.

You can put the pull-down shelves in upper cabinets, the pullout shelves in lower cabinets and install a pullout pantry system for good measure. There’s a handle on the bottom of the shelves in the upper cabinets, so you can pull down the shelves toward you and bring them to countertop level. The pullout shelves in the lower cabinets eliminate the problem of bending and reaching into the back of a shelf to get things. And the pantry system eliminates the need to reach up for spices or other items. You can install the shelves in your existing cabinets.

Update Your Kitchen Drawer and Cabinetry Pulls

Cost: $300 (small project)

This area to improve seems like such a small thing that you might not even notice it: the pulls you use to open your cabinet drawers and doors. But when you get older, you can catch your fingers in small loops on the pulls or find it painful to tightly grasp them.

You can change them out to longer and wider drawer pulls, which are easier for arthritic hands. Even small changes such as replacing cabinetry pulls can make your kitchen more functional for you as you age.

Brighten Things Up with LED Canister Lights

Cost: $200 per fixture (big project)

Your vision declines as you age, so don’t forget about improving the lighting in your home. Your old ceiling fixtures may not be bright enough, and putting lamps around the room likely won’t be adequate to compensate.

For a total of $1,600, installing two rows of four LED canister lights running lengthwise on each side of a living room ceiling can transform a once-dismal room into a comfortable place to curl up on the furniture with your tablet or book. And bonus: The LED bulbs will last for years.

Add Nightlights (With a Twist) Throughout Your Home

Cost: $60 to $100 for a light-rimmed toilet seat (small project)

Other areas of your home also can benefit from lighting changes. You can rim a toilet seat with a soft blue light, for instance, so you can easily and safely find the toilet without turning on a bright light.

The light will even highlight the inside of the bowl when you lift the seat, for extra help. In your kitchen, you can add toe-kick nightlights under your base cabinets, for when you sneak in for a midnight snack.

Homeowners sometimes worry that ramps from a sidewalk to the front door may be unsightly and detract from value when selling their homes, but like grab bars, ramp designs are improving.

Instead of a typical wooden ramp with railings attached to the side of the house, you can build a path that looks like a sidewalk, often using slate, and nicely bordered by landscaping–a “lipstick on a pig” approach that hides the appearance of a ramp.

Eliminate the Door Threshold

Cost: $400 (small project)

As you get older, just getting to the door might not be enough. A typical entry door often has a threshold that sticks up about an inch or so, making it hard for wheelchairs to pass over and presenting a tripping hazard.

You can remove the threshold bump and give the door a retractable bottom that seals when the door is closed and lifts when the door is swung open. A homeowner can activate the device and open the door using just a pinky finger–with no threshold bump, he or she can roll or easily walk in. When the door closes, the rubber door seal drops to ensure the entry is tight and secure.

Whether you’re seeking to manage your own assets, control how your assets are distributed after your death, or plan for incapacity, trusts can help you accomplish your estate planning goals. Their power is in their versatility–many types of trusts exist, each designed for a specific purpose. Although trust law is complex and establishing a trust requires the services of an experienced attorney, mastering the basics isn’t hard.

What is a trust?

A trust is a legal entity that holds assets for the benefit of another. Basically, it’s like a container that holds money or property for somebody else. You can put practically any kind of asset into a trust, including cash, stocks, bonds, insurance policies, real estate, and artwork. The assets you choose to put in a trust depend largely on your goals. For example, if you want the trust to generate income, you may want to put income-producing securities, such as bonds, in your trust. Or, if you want your trust to create a pool of cash that may be accessible to pay any estate taxes due at your death or to provide for your family, you might want to fund your trust with a life insurance policy.

When you create and fund a trust, you are known as the grantor (or sometimes, the settlor or trustor). The grantor names people, known as beneficiaries, who will benefit from the trust. Beneficiaries are usually your family and loved ones but can be anyone, even a charity. Beneficiaries may receive income from the trust or may have access to the principal of the trust either during your lifetime or after you die. The trustee is responsible for administering the trust, managing the assets, and distributing income and/or principal according to the terms of the trust. Depending on the purpose of the trust, you can name yourself, another person, or an institution, such as a bank, to be the trustee. You can even name more than one trustee if you like.

Why create a trust?

Since trusts can be used for many purposes, they are popular estate planning tools. Trusts are often used to:

Minimize estate taxes

Shield assets from potential creditors

Avoid the expense and delay of probating your will

Preserve assets for your children until they are grown (in case you should die while they are still minors)

Create a pool of investments that can be managed by professional money managers

Set up a fund for your own support in the event of incapacity

Shift part of your income tax burden to beneficiaries in lower tax brackets

Provide benefits for charity

The type of trust used, and the mechanics of its creation, will differ depending on what you are trying to accomplish. In fact, you may need more than one type of trust to accomplish all of your goals. And since some of the following disadvantages may affect you, discuss the pros and cons of setting up any trust with your attorney and financial professional before you proceed:

A trust can be expensive to set up and maintain–trustee fees, professional fees, and filing fees must be paid

Depending on the type of trust you choose, you may give up some control over the assets in the trust

Maintaining the trust and complying with recording and notice requirements can take up considerable time

Income generated by trust assets and not distributed to trust beneficiaries may be taxed at a higher income tax rate than your individual rate

The duties of the trustee

The trustee of the trust is a fiduciary, someone who owes a special duty of loyalty to the beneficiaries. The trustee must act in the best interests of the beneficiaries at all times. For example, the trustee must preserve, protect, and invest the trust assets for the benefit of the beneficiaries. The trustee must also keep complete and accurate records, exercise reasonable care and skill when managing the trust, prudently invest the trust assets, and avoid mixing trust assets with any other assets, especially his or her own. A trustee lacking specialized knowledge can hire professionals such as attorneys, accountants, brokers, and bankers if it is wise to do so. However, the trustee can’t merely delegate responsibilities to someone else.

Although many of the trustee’s duties are established by state law, others are defined by the trust document. If you are the trust grantor, you can help determine some of these duties when you set up the trust.

Living (revocable) trust

A living trust is a special type of trust. It’s a legal entity that you create while you’re alive to own property such as your house, a boat, or investments. Property that passes through a living trust is not subject to probate–it doesn’t get treated like the property in your will. This means that the transfer of property through a living trust is not held up while the probate process is pending (sometimes up to two years or more). Instead, the trustee will transfer the assets to the beneficiaries according to your instructions. The transfer can be immediate, or if you want to delay the transfer, you can direct that the trustee hold the assets until some specific time, such as the marriage of the beneficiary or the attainment of a certain age.

Living trusts are attractive because they are revocable. You maintain control–you can change the trust or even dissolve it for as long as you live. Living trusts are also private. Unlike a will, a living trust is not part of the public record. No one can review details of the trust documents unless you allow it.

Living trusts can also be used to help you protect and manage your assets if you become incapacitated. If you can no longer handle your own affairs, your trustee (or a successor trustee) steps in and manages your property. Your trustee has a duty to administer the trust according to its terms, and must always act with your best interests in mind. In the absence of a trust, a court could appoint a guardian to manage your property.

Despite these benefits, living trusts have some drawbacks. Assets in a living trust are not protected from creditors, and you are subject to income taxes on income earned by the trust. In addition, you cannot avoid estate taxes using a living trust.

Irrevocable trusts

Unlike a living trust, an irrevocable trust can’t be changed or dissolved once it has been created. You generally can’t remove assets, change beneficiaries, or rewrite any of the terms of the trust. Still, an irrevocable trust is a valuable estate planning tool. First, you transfer assets into the trust–assets you don’t mind losing control over. You may have to pay gift taxes on the value of the property transferred at the time of transfer.

Provided that you have given up control of the property, all of the property in the trust, plus all future appreciation on the property, is out of your taxable estate. That means your ultimate estate tax liability may be less, resulting in more passing to your beneficiaries. Property transferred to your beneficiaries through an irrevocable trust will also avoid probate. As a bonus, property in an irrevocable trust may be protected from your creditors.

There are many different kinds of irrevocable trusts. Many have special provisions and are used for special purposes. Some irrevocable trusts hold life insurance policies or personal residences. You can even set up an irrevocable trust to generate income for you.

Testamentary trusts

Trusts can also be established by your will. These trusts don’t come into existence until your will is probated. At that point, selected assets passing through your will can “pour over” into the trust. From that point on, these trusts work very much like other trusts. The terms of the trust document control how the assets within the trust are managed and distributed to your heirs. Since you have a say in how the trust terms are written, these types of trusts give you a certain amount of control over how the assets are used, even after your death.

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Broadridge Investor Communication Solutions, Inc., Mutual of Omaha Investor Services, Inc. and its representatives do not provide tax or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

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The S&P 500 Index (SPX​) should reach a record 2,800 by the end of 2018, more than 7.5% above the open of trading on Monday, based on the average forecasts from nine market strategists polled by Bloomberg. Some strategists forecast stocks could rise as much as 27 percent. Those gains would create the longest bull market on record. Key reasons for their continued bullishness, per Bloomberg: even without tax reform, corporate earnings in the U.S. are rising at a double-digit pace, and the global economy is showing its most consistent growth in more than a decade.

Most of these strategists did not put assumptions about tax reform into their forecasts, Bloomberg notes. The most bullish tax reform scenario is offered by strategist Keith Parker of Swiss banking giant UBS Group AG. Parker has a base case of 2,900 for the S&P 500 in 2018, up 11.5% from today’s opening, but he projects that the index could reach 3,300, up 26.8%, if corporate tax cuts take effect in 2018, Bloomberg says.

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